REPORT FROM THE U.S.—The crystal ball might be getting clearer, but that does not mean revenue managers should disregard hotel performance that has come and gone.
Despite an emergence in recent years of new ways to collect, track and segment forward-bookings information, the best modeling still begins with a strong foundation of historical data, revenue managers said.
“Historical data, when managed and interpreted correctly, is extremely important,” said Alexander Lee, group director of revenue management and distribution for Jumeirah Group, via email. “We make use of historical data to build up our booking pace reporting, which is a component in developing our unconstrained demand forecast.”
Vantage Hospitality Group
Vantage Hospitality Group takes a similar approach, according to Jesse Ostrum, VP of revenue management.
“Back in the old days, all of 10 years ago, everything was just historically based. You took what happened last year, you adjusted for the holidays, and that’s what you had forecasted for the upcoming year,” he said.
But now Vantage is using information on future reservations, pace and pickup to tweak historical occupancy and average-daily-rate projections.
The availability of forward-looking data is quite new to the discipline, said Brenda Gordon, corporate director of revenue management at Omni Hotels. “It’s something that really wasn’t available to use in the past,” she said.
“We’ve always had our internal demand observation that we would apply … but now this is a new territory where we’re not only able to see what demand looks like at our hotel but also what demand looks like for a specific number of competitors,” Gordon said of comparative analysis data provided by companies such as TravelClick, among others.
Battling booking windows
Omni’s revenue-management team forecasts 365 days into the future, Gordon said.
Lee’s team at Jumeirah does the same for pricing and booking data—especially for resort properties that see more booking activity and customer demand. When it comes to unconstrained demand, the group models out even further, forecasting by market segment on a daily basis for 560 days into the future.
And after some compression during the downturn, both Omni and Jumeirah are seeing elongated lead times.
“It is normal for a number of our hotels to see repeat guests re-booking more than 12 months in advance for our higher demand periods,” Lee said.
However, he admitted booking windows will always be “unique to each property and market.”
Take Daytona Beach, Florida, for example, where Ostrum sees a booking window of three to five days, maximum.
“When you’re looking at your pickup, you’re going to be looking 30 days out … but outside of 14 days, the relative usefulness of any pickup numbers is going to be relatively slim,” he said of the leisure-dominated market.
What was once a trend in Daytona is quickly becoming reality in many markets, Ostrum added.
“Unfortunately, I think it’s the new normal. There’s so much (information) out there that folks can make a last-second booking decision without any real effort on their part,” he said.
That’s where historical data becomes so important, Ostrum said.
“But in your more standard marketplaces … you can realistically have your historical base, see what your pickup percentage throughout shoulder or high period is and tweak it based on future reservation pace, and then do final tweaking 30 days out to really see what changes are going on,” he said.
“It’s all patterning. If the patterns are going in the right direction and you’re not seeing anything that’s showing you something dramatically, you can make these adjustments 30 to 40 days out,” he added.
More than just rate
Like historical data, forward-looking data allows for an amazing amount of segmentation by market, group, distribution channel and so on, Omni’s Gordon said.
The availability of such data underscores momentum behind total revenue management, which encompasses more than just rooms revenue.
“With revenue management, we’ve kind of pigeonholed ourselves into rooms revenues, but it’s really looking at total customer spend and total contribution from each segment of business and understanding how those ancillary revenues that are generated either by groups that we host or individual travelers, how that effects our bottom line,” he said.
Vantage, for example, has moved away from forecasting occupancy alone and now forecasts occupancy in addition to ADR, ancillary revenue and even business mix, Ostrum said.
“That really gives us the best budgeting and forecasting detail to make those decisions to get that little bit extra out of each property,” he said.
“Holistic is the key term these days. Everything adds up,” Ostrum added. “It’s not anything new from the old days, but it’s just more in everyone’s forefront to look at the bottom-line revenue from all sources.”
“If we can predict one, why can’t we predict them all?”